Property taxes illustrate the difficulty of taxing wealth
On Monday, my colleague Tom Steward wrote about property valuations by county assessors in Crow Wing County. As house prices have surged in the last 18 months, these new valuations…
Property valuations by county assessors have gone through the roof all over Minnesota this year, but nowhere more so than in Crow Wing County. Brainerd Lakes Area residents are still lining up to contest the 35 percent average hike in property assessments countywide, according to the Brainerd Dispatch.
[County Land Services Director Gary] Griffin said the land services department counted more than 2,000 individual contacts with concerned residents since it mailed property valuations in March. Meetings of local boards of appeal and equalization — which provide the opportunity to appeal values or tax classifications — saw unusually high attendance this spring. And the next step for those still dissatisfied, the County Board of Appeal and Equalization meeting set for next month, will require six days to include everyone wishing to appear on the agenda. This is typically accomplished in one day.
But it turns out the skyrocketing valuations, which residents view as a precursor to higher property tax bills, weren’t high enough for state revenue bureaucrats in the case of vacant land parcels. State law requires counties to value property at no less than 90 percent of the established market price in the area. But Crow Wing County’s vacant land assessments came in slightly under the floor of the supposed market value, prompting a Minnesota Department of Revenue reprimand.
“Just a point to, I guess, help refresh or remind you guys that this is a state-prescribed process,” Griffin said. “ … I’ve been doing this for 12 years for Crow Wing. Never had a state board order, and this is the closest we ever came.”
In the case of a county out of compliance with the state’s acceptable range, the State Board of Equalization issues a corrective order to raise or lower property values accordingly. Griffin said although Crow Wing’s rural vacant land values sat at an 85% ratio, the board will not issue a correction. Instead, the revenue department offered a strong recommendation for the county to increase its values appropriately for 2023.
Griffin said the report comes despite an average 31-32% increase in the value of rural vacant land in Crow Wing.
Several members of the North Central Minnesota county bristled at the state’s notification that they need to jack up land valuations even higher.
“We’re already at an average of 35% … and the state thinks they need more than that? And it’s their process,” said Commissioner Steve Barrows. “It’s their process we have to adhere to. That’s unacceptable. And I know they were trying to do something at the Legislature, and they can’t get their job done. That’s on them. That’s not on us. And it penalizes every one of our taxpayers in Crow Wing County. And that is unacceptable.”
“Well I don’t think there’s any of us that disagree with you,” added Commissioner Rosemary Franzen.
The backlash from constituents and tone-deaf response from state revenue led to discussion among frustrated county commissioners over the potential ramifications of simply ignoring the agency’s warning.
Commissioner Paul Koering asked what would happen if Crow Wing County refused to comply with an order from the state.
“What’s the penalty if we’re not the good child and we don’t do our — don’t do what they tell us to do?” Koering asked.
Griffin said the state would take valuation into its own hands, increasing or decreasing values as it sees fit. County Administrator Tim Houle added laws requiring local governments to comply with various state mandates often carry the threat of a loss of state aid if those mandates are ignored.
Nevertheless, it’s hard to blame property owners for pushing back against a system that’s led Crow Wing County property valuations to rise by 66 percent in the last five years with no end in sight.
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